VOC port, Tuticorin - Setting examples for the fraternity

This port is located very close to the southernmost tip of mainland India, faraway from any metropolis. Despite this, it’s the third biggest major port in the country in terms of container traffic. Is it the proximity to a major transhipment hub like Colombo that’s driving traffic to it? Or is it the people associated with the port that makes it a popular choice among exporters and importers? To find the secrets of its success, The Dollar Business visited the home to one of India’s smallest but fastest growing major port – Tuticorin.

Sisir Pradhan | September 2015 Issue | The Dollar Business

For the last several months, I was eagerly looking forward to my visit to V. O. Chidambaranar (VOC) Port, Tuticorin, even though responses to my requests for meeting port officials, were just lukewarm. The reason for my enthusiasm was simple. Container traffic at VOC Port has been rising steadily for the last few years and it’s one of the very few ports in the country where container traffic accounts for over a third of the total traffic.

Calm seas

Although every year, Nhava Sheva Port and Chennai Port handle many times more container cargo than what VOC Port does, they are different. They are located in two of the biggest metropolises of not just India, but whole of Asia and it’s par for the course for them to handle more container traffic. On the other hand, Tuticorin is located very close to the southernmost tip of mainland India, faraway from any metropolis. Despite this, container traffic at VOC Port grew by 8.9% y-o-y in FY2015, which followed a 8% plus y-o-y growth in the previous year. Surprisingly, and too pleasantly, the steady growth in traffic at the port is not due to mechanical infrastructure, but thanks to people associated with it. For, unlike most other ports in the country, labour unrests and strikes are unheard of in Tuticorin. Explaining the reason for the same to The Dollar Business, K. Pon Venkatesh, a third-generation entrepreneur in shipping, freight-forwarding and Customs clearance at Tuticorin, says, “A private body called Tuticorin Stevedores Association (TSA) was established by port users in the early 1990s, which used to regulate the pool of labourers engaged in bulk cargo handling here. This is unlike anything you will see at most other ports in the country where labourers are direct employees of the port and hence, are expensive and tend to get engaged in trade unionism. Later, in the year 2000, although the port took over them from TSA, it made them part of a separate wing named Cargo Handling Division, instead of making them direct employees. As a result of such innovative and foresighted steps, there are absolutely no labour issues here.”

VOC-port,-Tuticorin-Cargo-handling-capacity

VOC Port, Tuticorin, has 14 berths and a cargo-handling capacity of 44.55 MMT.

All ends covered

Cargo wise traffic handled by VOC port

VOC Port, formerly called Tuticorin Port, was declared a major port in 1974. However, it saw meaningful traffic only after a new harbour, called Zone A, came into existence, which triggered rapid economic growth in the region and saw the setting up of companies like DCW, Southern Petro Chemicals, Tuticorin Alkali Chemicals, Heavy Water Plant, Sterlite Industries and about seven thermal power plants.

Today, VOC Port has 14 berths, with a cargo-handling capacity of 44.55 MMT. While berths VOC-I and VOC-II have a draft of 9.3 metre and handle break bulk cargo like raw cashew, palm oil, steel plates, granite and timber, VOC-III and VOC-IV have a draft of 10.8 metre and cater to the needs of bulk cargo like industrial coal, rock phosphate, copper concentrates, lime stone and pet coke. Similarly, Additional Berth-I and Additional Berth-II, with drafts of 8.6 metre and 9.3 metre respectively, handle liquid cargo, project cargo and other break bulk cargo and Berth No.9, with a draft of 12.8 metre, is used to handle industrial coal, copper concentrates, rock phosphate, furnace oil, fertiliser, ilmenite sand, sulphuric acid, phosphoric acid and fertiliser raw material.

On the other hand, container terminal Berth No.7, with a quay length of 370 metre and a draft of 10.7 metre, is being operated by PSA-SICAL under BOT basis, while captive berths of TANGENCO, Coal Jetty-I and Coal Jetty-II, also with a draft of 12.8 metre, cater to the coal needs of Tuticorin Thermal Power Station located nearby. VOC Port also has an oil jetty to cater to the oil needs of South Tamil Nadu and captive berth – North Cargo Berth-I – to cater to the coal needs of the 1,000 MW Neyveli Thermal Power Limited. Despite a diverse arsenal the port continues to plan for the future. “Currently, we have 12.8 metre draft inside the basin and are developing another harbour, further from the shore, which will have a 16 metre draft and allow us to handle bigger vessels,” U. Rajendran, Traffic Manager, VOC Port, tells The Dollar Business.

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Thermal-power-plants-The-Dollar-Business

VOC Port, Tuticorin, has helped the growth of seven thermal power plants in the region.

Arterial

Other than its people, a big strength of VOC Port is the great connectivity Tuticorin has with its hinterland. For, when it comes to rail, while on one hand it is connected with the Madurai-Bangalore mainline, which passes through important trading centres like Dindigul, Karur, Erode and Salem, on the other hand, it is also well-connected with the Madurai-Tiruchirappalli-Chennai mainline. Similarly, when it comes to roads, it is well-connected with Tirunelveli via a four-lane highway – NH 138 (earlier NH-7A) – and with Chennai, via Madurai, through NH 45B. The famous East Coast Road, along the Bay of Bengal, also connects Tuticorin with Chennai.

"There’s hardly ever been any labour problem at VOC Port"

“VOC Port has a lot of inherent strengths – it’s an all-weather port and is located closer to the international sea route. Unlike other ports on the east coast, it is not prone to cyclonic storms,” R. Edwin Samuel, CEO, Pearl Shipping Agency, tells The Dollar Business, enumerating some of the port’s other positives. “The people of the region are very enterprising and most of the development you see here is due to individual efforts. There is abundance of skilled manpower, since the literacy rate here is very high,” he adds.

Answering why VOC Port has become the port of choice for many of his clients, Samuel says, “While very limited number of ships call at Mangalore Port, Cochin Port is reeling under frequent strikes and Chennai has congestion issues. On the other hand, VOC Port is dependable. A container that arrives here, very often, gets shipped away the very same day.” S. Muthuraj, Founder, SVM Exports, an exporter of herbs like moringa, tulsi and papaya leaves to China and other Asian countries, too has nothing but praise for VOC Port. “The availability of low-cost labourers and VOC Port are the main reasons for the success of trade in the region,” he adds.

On similar lines, Sumit Srimal, Vice President (Fragrance Division), Ramesh Flowers, says, “We have been exporting dry flowers and home fragrance and home décor products since 1982 and the port has been instrumental in our success. On an average, we export three high-cube-containers full of products a day, which rises to 4-5 TEUs/day during the peak season. And usually, it is a very hassle-free experience. VOC Port has a quick turnaround time as well. Unless there is an all-India transport strike, business is normal all around the year. Our choice of Tuticorin as our base has a lot to do with its favourable weather conditions, the state’s good industrial policy, as well its proximity to VOC Port.”

Traffic handled by VOC Port

The Niggle

While most things are in place for VOC Port to make rapid strides, it’s not that it doesn’t have its share of problems. And ironically, the biggest issue affecting the port is related to its biggest strength – containers. For, the PSA-Sical operated container terminal at the port is caught in a legal tangle over royalty payments, which has badly affected infrastructure upgradation. “PSA-Sical had entered into a contract with VOC Port to develop, operate and maintain its container terminal. Following this, container handling operations started here in 1999 and handling charges here continue to be one of the lowest in the country. However, as per the contract, PSA-Sical needs to pay royalty to the port, which increases every year. This provision in the contract has led to a legal tussle between the two parties, which has also resulted in no upgradation in the infrastructure at the terminal,” P. Jeyanth Thomas, President, Tuticorin Customs Brokers’ Association, tells The Dollar Business. Similarly, although the port had in 2012 signed a concession agreement with Dhakshin Bharat Gateway Terminals (DBGT) to develop Berth No. 8 as a container terminal, it hasn’t made much headway, despite token operations using vessel gears for a brief period in May 2014.

VOC-port,-Tuticorin-bulk-cargo-TheDollarBusiness

Two berths at VOC Port – VOC-I and VOC-II – exclusively handle break-bulk cargo, including timber.

Interestingly, two reach stackers that DBGT had brought in for the container terminal failed to get clearance from Ministry of Defence as they were manufactured in China. Though the ministry, later in May, 2015, revoked the ban on ‘Made in China’ cranes, it didn’t compensate the loss of precious time. Thomas adds, “VOC Port is doing good, but for its long-term sustainability, tariff issues related to the PSA-Sical operated terminal need to be resolved at the earliest. Currently, the terminal’s quay length is 370 metres and it has three Quay Cranes (QCs). But as per international standards, there should be one QC at every 80 metres. I don’t think until the royalty issue is resolved, the terminal operator will make any investment to upgrade and improve infrastructure. On the other hand, 370 metre berth, anyway, is not adequate to accommodate even two vessels of 1,600-2,000 TEUs capacity. The DBGT berth, at 345 metre, is even shorter.”

TANGENCO-TheDollarBusiness Of the 14 berths at VOC Port, Tuticorin, several are for captive users like TANGENCO and Neyveli Thermal Power Ltd.[/caption]

Nothing unanswered

In the last 10 years, VOC Port has had a fairly good run. Since it facilitates faster movement of shipments, trade saves an estimated 20% on freight cost, as compared to Chennai Port. Similarly, labour unrest and strikes at Cochin Port have also pushed a lot of exporters towards Tuticorin. With industrial activities, particularly those that are port-related, in the region growing at a rapid pace, VOC Port shouldn’t have too difficult a time in the foreseeable future.

The only question that remained unanswered in my visit to VOC Port, was whether this port was responsible for the high literacy rate, communal harmony and enterprising people of the region, or was it the other way round. Whatever the truth, this port does make us realise that people with positive conduct and willingness to build in co-operation can together build imaginable greatness.

“Handling charges here are the lowest” – Balmukund, Assistant Commissioner, Customs, Central Excise & Narcotics, Thoothukudi

Balmukund, Assistant Commissioner, Customs, Central Excise & Narcotics, Thoothukudi

TDB: What is the USP of VOC Port? What role has it played in the growth of trade and business in the region?
Balmukund: VOC Port enjoys certain geo-economic advantages. It’s inherent in its location. While most other major ports in India were developed at British presidencies, which later grew into metropolitan cities, and hence, today, face congestion issues due to large-scale urbanisation, VOC Port at Tuticorin was developed much later in 1974 at a location faraway from human habitat. Moreover, six and four lane expressways connect it to its hinterland. Thanks to these congestion-free expressways, many exporters from even Chennai use this port. Most industries in this region are export-based and imports are limited to only a few commodities like palm oil, timber and coal. At the same time, Sterlite Industries uses VOC Port to import copper concentrates, which account for a large chunk of the Customs department’s revenue. I would also say that though imports here are growing thanks to a congestion-free environment, abundant vacant land, stable power supply, etc., the growth potential of exports is also certainly very high.

TDB: How does the port fare when it comes to cargo handling facilities and tariff? Is its proximity to a major transhipment hub like Colombo an advantage for exporters?
Balmukund: In terms of handling charges like those charged by freight forwarders, customs clearing houses, ground rent and expenses related to other formalities, VOC Port is the cheapest in the country. That’s why many exporters from even Chennai use it. All stakeholders associated with cargo handling here are so proactive and clearance at the port is so fast that cargo, often, goes on board the very day it arrives. On the other hand, vessels take two-three days to get berthed at Chennai Port. Unfortunately, India doesn’t have very good natural harbours. The draft at most Indian ports is not enough to accommodate big mother-vessels, because of which, we continue to depend on trans-loading. But since the sailing time from Tuticorin to the nearest major transhipment hub – Colombo – is just 12 hours, a good number of feeder vessels provide good connectivity between the two ports. Moreover, since the destinations for most containers that are exported from Tuticorin are USA, European Union and Japan, being able to reach Colombo within 12 hours and then getting on board mother-vessels is a big advantage.

TDB: Which are the main industries that use VOC Port?
Balmukund: Given that the port is well connected to its hinterland, it always has a steady inflow of consignments, particularly textile products from Tirupur and Bangalore. Exports of high-end products from the port are also rising, thanks to companies like TAFE (Tractors and Farm Equipment Ltd.) starting to use it. Further, sea food exports from here are also rising gradually.

TDB: Tell us a bit about the Customs department’s performance here in Tuticorin.
Balmukund: There was very little traffic at VOC Port till 2002. However, in the last decade, there has been a significant growth in traffic, which has led to the setting up of a full-fledged Customs Commissionerate here. But as far as the Chief Commissionerate is concerned, VOC Port still comes under the Trichy zone. Under the Commissionerate here, there is also one ICD, operated by St. John Freight Systems Private Limited, and 13 container freight stations (CFSs). Their biggest advantage is their location, since they are all located close to the port, alongside the Harbour Express Road – a dedicated expressway that connects the port to national and state highways. In fact, even the farthest CFS from the port is located just 18-20 km away. Since we generously give permission to open CFSs to whoever fulfils the set criteria, there’s fierce competition among them to gain clients. This has helped in bringing down charges.

“There’s at least one feeder vessel per day from Tuticorin to Colombo” - P. Jeyanth Thomas, President, Tuticorin Customs Brokers’ Association

P. Jeyanth Thomas, President, Tuticorin Customs Brokers’ Association

TDB: From a CHA’s point of view, tell us how the facilities and the business environment at VOC Port are.
P. Jeyanth Thomas (PJT): VOC Port has certain unique advantages, like its location and route. The Harbour Expressway, which bypasses the Tuticorin city, connects the port directly with national and state highways, unlike Cochin and Chennai ports, where goods travel through very congested roads, which increases the transportation time and cost. The back-up infrastructure – ICDs, CFSs, warehouses, Customs office, and shipping agents – is also located near the port, alongside the Harbour Expressway, which is of great convenience. Once containers leave the hinterland, they reach the facility centres, where all procedures such as Customs clearance take place and goods are then moved inside the port. Unlike other ports, there are no time restrictions on cargo movement here. The biggest trade facilitator here, however, is labour cooperation. Workers here are so disciplined that Customs clearance gets done within no time. Labour-related issues have never affected trade at VOC Port. We haven’t ever faced any labour strike or standoff.

TDB: Since most major ports face issues related to gang systems and labour strikes, has VOC Port adopted any unique measure to ensure smooth operations?
PJT: At Tuticorin, gang systems only handle bulk cargo, since container handling operations don’t take place inside the port. For central excise containers, formalities are done at factories. Similarly, SEZs have their own systems. The rest of the cargo goes to CFSs, where stuffing and de-stuffing takes place. So, at the port’s gates, only the ‘allowed for shipment’ formalities are carried out by Customs brokers.

TDB: How is Tuticorin’s proximity to a hub-port like Colombo helping trade?
PJT: Since Tuticorin is located close to the international maritime sea route, the movement of containers from it to Colombo takes much lesser time than any other port in India. We have eight feeder vessel services to Colombo and they have been scheduled such that at least one vessel sails every day and there is zero-waiting time.

TDB: Do you think VOC Port needs an improvement in rail connectivity?
PJT: Yes! VOC Port had good rail connectivity when Shipping Corporation of India, along with major shipping lines like CMA-CGM and Contship Container Line, used to operate the INDAMEX (India America Express) service. Those days, there used to be a weekly rail service between Tuticorin and Bangalore. So, a lot of US East-coast bound cargo, originating from Bangalore, used to get shipped from Tuticorin. But that service has now been terminated. The saving grace for VOC Port, though, is that unlike many other ports and ICDs in the country, its hinterland is in a 300 km radius. And anyway, thanks to good road connectivity, delays are not an issue here.

TDB: How has the ongoing tariff-related tussle between container terminal operator PSA-Sical and VOC Port affected trade?
PJT: PSA-Sical had entered into a contract with VOC Port to develop, operate and maintain its container terminal. Following this, container handling operations started here in 1999 and handling charges here continue to be one of the lowest in the country. However, as per the contract, PSA-Sical needs to pay royalty to the port, which increases every year. This provision in the contract has led to a legal tussle between the two parties, which has also resulted in no upgradation of the infrastructure at the terminal.

VOC port, Tuticorin - Setting examples for the fraternity

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